Are Wage Cost Differentials Driving Delocalisation?

This paper compares the wage cost and productivity differentials between Belgium and Portugal, being the EU benchmarks for high and low labor costs, with those in the three leading emerging economies of Central and Eastern Europe, Poland, Hungary and the Czech Republic. To this end we use firm level data to construct measures of labor costs and labor productivity. We find that labor costs are more than 5 times larger in Belgium compared to Central and Eastern Europe. But also compared to Portugal, labor costs in Belgium are 4 times larger, indicating that even within the EU there are huge diff... Mehr ...